Russia: Fifth Of Defense Budget Stolen

MOSCOW (Reuters) - A fifth of Russia's state defence spending is stolen every year by corrupt officials, dishonest generals and crooked contractors, Russia's chief military prosecutor said in an interview published on Tuesday.

President Dmitry Medvedev says endemic corruption is holding back Russia's development, but anti-bribery groups say the problem has become worse since Medvedev was steered into the Kremlin by his mentor Vladimir Putin in 2008.

"Huge money is being stolen - practically every fifth rouble and the troops are still getting poor quality equipment and arms," chief military prosecutor Sergei Fridinsky told Russia's official gazette, Rossiiskaya Gazeta. "Every year more and more money is set aside for defence but the successes are not great," he said, adding that kickbacks and fictitious contracts were being used to defraud the state.

Fridinsky did not give specific figures, but Russia has set more than 1.5 trillion roubles (32 billion pounds) for national defence in its 2011 budget, indicating theft of more than $10 billion (6 billion pounds) a year from the sector.

While western countries roll back defence spending Putin has promised to spending nearly 20 trillion roubles over the next decade to renew the country's rusting armaments with new submarines, nuclear missiles and air defence systems.

Medvedev has repeatedly warned Russia's notoriously corrupt defence sector to clean up its act and this month sacked several industry chiefs over what the Kremlin said were unfulfilled contracts.

Russia is still the world's second-largest arms exporter but its defence industry is riddled with corruption and thousands of young men each year try to bribe their way out of having to do their national service.

Corruption is a way of life in Russia, from small bribes slipped into the pockets of traffic policemen or doctors to the vast kickbacks which investors say senior officials demand for access to state contracts in the natural resources sectors.

Transparency International rated Russia joint 154th out of 178 nations in its corruption perceptions index last year, along with Cambodia, Kenya and Laos. It was Russia's lowest ranking since the index began in 1995. In 2009 it was 146th.

Russia was perceived to be more corrupt than any other member of the G8, G20 or even peers such as India, China and Brazil, which were ranked at 87th, 78th and 69th.

When asked if he thought senior officials were involved in the corruption, Fridinsky said: "Work it out for yourself."